Online merchants buying into retail storefronts

Why are successful online boutiques setting up real-world shops?Well, for starters, e-commerce sales in the first quarter of 2013 accounted for just 5.5 percent of total sales in the U.S., according to the Census Bureau of the Department of Commerce.

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Retail analysts have long predicted the demise of brick-and-mortar boutiques. E-commerce, and now increasingly mobile commerce, has been touted as the future for growing sales.

So why are successful online boutiques setting up real-world shops?

Well, for starters, e-commerce sales in the first quarter of 2013 accounted for just 5.5 percent of total sales in the U.S., according to the Census Bureau of the Department of Commerce.

That’s not insignificant; it’s still a whopping $58 billion, which is $8 billion more than the same period last year. But with 94.5 percent of the market still out there, it’s no wonder Google, the most successful online channel on the planet, is looking to open retail stores.

“People really want to touch something and see exactly how big it is and talk to someone. You can’t underestimate that,” said Katie Miller, of Scarlett Garnet Jewelry, a seven-year-old business that opened a storefront last year in St. Louis. “You can do great work with photos and video online, but there’s no real way you can have the immediacy of seeing it, buying it and taking it home right away.”

After years of selling online through their website or Etsy.com and through pop-up shops at local art fairs and farmers markets, Miller and her partner, Garnet Griebel, wanted to try a physical location. She said it was a little scary, but they worked to keep their initial costs low. She said they knew almost immediately it was the right decision.

Online retail is not as low-cost and carefree as it seems, she said. Each item has to be described in minute detail; photos have to be engaging (they hired models and professional photographers); and the website had to be updated constantly.

It’s not just putting up a snapshot and a price and watching the sales roll in, she said.

Conversely, her shop deals with fewer clients, but she has the luxury of their full attention. A physical store also gives her credibility online.

“Having a store gives us more of an identity,” explained Tina Anthon, the president of Geranium Jewelry, a wholesale accessories line based in Ballwin, Mo., that is already carried by thousands of stores nationwide. Anthon’s 4-year-old online wholesale arm has been a bona fide success, increasing sales each quarter.

It gave her the courage to open Geranium Boutique in November in Richmond Heights, Mo.

She said that initially a store was not in her plans. “It’s definitely more expensive, but it’s another avenue to grow, so if it’s working we want to continue down that path.”

Crafters who have established online businesses are applying in droves to join the curated shop at the Foundrie in Chesterfield (Mo.) Mall. The large shop, which does not have its own online store, provides a steady outlet for unique local designs. The owners say it fuels online sales for their artists.

“Even if they don’t buy anything that day, people always say they love the store because it feels special, not corporate,” said Elizabeth Hahn, who co-owns the Foundrie, founded
as a holiday pop-up.

Hahn started her personal-accessories business Just Liv by selling on Etsy in 2007, when the site was new.

“Business grew like gangbusters because there were not as many sellers, but within a few years all these people were like, ‘Wow, I can make money selling crafts, too.’ So now, you get lost in the shuffle. There’s a lot of junk,” Hahn said.

It’s cheap to start an online business, she said, but marketing is a different matter: “What are you going to do to make yourself seen? What is going to set you apart?”

Their store is more intimate, she said, shoppers come in and often exclaim, “This is great; it’s a real live Etsy.”